In World Economy News 10/03/2017
The European Union must avoid the “suicidal strategy” of alienating Britain by ensuring that any trade barriers it imposes after Brexit still give the world’s fifth biggest economy better terms than it can get elsewhere around the globe, Hungary’s top diplomat said.
With the U.K. on the prowl for what Foreign Secretary Boris Johnson has called “jumbo” trade deals after its exit from the EU, the 27 remaining members of the trading bloc needs to strike an agreement that keeps economic links strong and heads off other countries vying for Britain’s favor, Hungarian Foreign Minister Peter Szijjarto said in an interview in Budapest.
“We need to avoid a situation whereby the EU goes to the back of the line for Britain,” which is currently the bloc’s second-largest economy after Germany, Szijjarto said Tuesday evening. “Losing such a partner and giving it away to others would be a suicidal strategy.”
Szijjarto spoke shortly after Britain’s ambassador to Hungary, Iain Lindsay, told a conference in Budapest that his government’s aim was to avoid tariffs of any kind on the trade of goods. While that would be “ideal,” Szijjarto said it’s a non-starter in the EU, where nations oppose separating the free trade of goods from the bloc’s three other essential “freedoms” of movement: workers, capital and services. As an EU member, Hungary will have the opportunity to sign off on any final deal.
“I don’t think it’s possible to create a consensus in Europe that allows for the separation of goods alone,” said Szijjarto. “And so the goal then is to have the lowest possible tariffs and certainly tariffs that are lower than anyone else will offer Britain.”
Britain is already laying the groundwork for free-trade agreements once it exits the EU, a process that could take as long as two years after the expected Article 50 notice that Prime Minister Theresa May has said would be delivered to Brussels this month. Johnson said last year the U.K. is hoping to agree on a post-Brexit trade pact with Turkey, and Szijjarto said Britain may end up striking similar arrangements with nations from the U.S. to Japan.
While some governments in the remaining EU nations have urged the bloc to reciprocate Britain’s “hard exit” from the EU — meaning a clean break from the EU common market — with an equally hard bargain, Szijjarto said that may be self-defeating.
“We can’t create a situation where Britain is better off trading with the Americans, Turks, Indians, Australians or Japanese,” Szijjarto said. “This is a challenge, and it’s going to be an interesting feat to resolve it.”
Source: Bloomberg
